Why Reliance will give a hard time to Amazon and Walmart

Reliance Industries has always been one of my favorite companies and the primary driver behind it has been the great founder, Late Mr. DB Ambani. He has been an inspiration for two generations of Indians. I find Mukesh to be much like his father, not trying to hog limelight but aggressively pushing new ideas and foraying into new ventures.

The latest announcement that Reliance Industries will be venturing into eCommerce is bad news for likes of Amazon and Walmart, who were making good penetration in the Indian market, despite being constrained by regulations. Though the platform will initially be available only to 1.2 million small retailers and store owners, it will eventually expand to end consumer.

Below are some of the key advantages that Reliance will have when (and if), it enters the eCommerce market:

Reliance Industries’ physical retail network: Imagine the benefits of combining India’s largest organized, brick and mortar retail network with a large eCommerce company. Reliance retail has an extremely strong retail footprint and a distribution network penetration across India. Though they will have to make tweaks to their network to accommodate eCommerce model, they still have an infrastructure that will help them hit the ground running…and running fast!

Bring into play the Reliance Jio telecom infrastructure and you can provide a complete Omni channel experience, along with a technology platform.

Reliance Industries’ brand recognition: My generation grew up hearing the rags to riches story of Late DB Ambani. His journey from a gas station attendant to the richest person in India was aspiring to many. Reliance’s brand recognition is strong enough to encourage certain aging Indian middle class segments that are currently not very enthusiastic about using internet to make purchases. For them, Amazon and Walmart are “not Indian enough”. With Reliance, it may be different.

Government regulations: Rather than opening Foreign direct investment, Indian Government seems to be tightening the noose on foreign owned online retailers, Last month, it made updates to existing rules and now disallows foreign owned retailers from selling products via companies in which they own equity, and forbid them from pushing merchants to sell exclusively through their platforms. These rules will impact both Amazon and Walmart but will certainly benefit local enterprise such as Reliance.